While Democratic nominee Joe Biden is rising in the polls to take over from President Donald Trump, his election would be unlikely to calm the tensions in the US/China trade war.
According to current polls, American voters were 48% in favour of Biden and 39% in favour of Trump.
In an Aberdeen Standard Investments (ASI) webcast, investment director for Asian equities James Thom and chief economist Jeremy Lawson said a victory for the Democratic party would not necessarily see a cessation of the trade war.
Talk of the US/China trade war dominated markets in the second half of 2019 as Trump imposed harsh tariffs on Chinese goods and spoke of his desire to successfully achieve a deal with China ahead of the November 2020 election. However, his efforts this year had been put on hold by the COVID-19 pandemic and the Black Lives Matters protests.
Lawson said: “Given the things the President is dealing with at the moment, an escalation of the trade war is not a priority for him right now but, after the election we are very concerned about the trade war.
“Support for Biden is rising, he may not subject us to the same tweetstorm as Trump and would look to mend relations with China but many fundamental forces in the US/China trade war won’t be changing and the geopolitical backdrop will still be challenging.”
Biden previously indicated that China needed to be held accountable but that Trump had mismanaged his response and should have built an international coalition. He also felt Trump’s action thus far had disproportionately hurt US consumers and manufacturers.
“The trade war is a significant source of volatility, it is very hard to predict and it is hard to predict or position for it,” said Thom.
“The US is becoming very mercantile and viewing China as a rival or a competitor rather than a facilitator.
He said a particular area of concern was companies in the technology hardware space such as Huawei after the firm was subject to an executive order from Trump banning US companies working with companies deemed a national security risk. The order, which was brought in over a year ago, had since been extended until May 2021.
There was also the possibility that the 156 Chinese companies listed on US indices, which included Baidu and Alibaba, could be delisted or voluntarily decide to leave and list on domestic exchanges instead which Thom said was a “source of concern”.
